If recent history is anything to go by, the announcement that London-based online auctioneer

QXL

has hired

Credit Suisse First Boston

for "strategic and financial advice" will likely end up with the company being floated.

Dixons Group

also hired CSFB earlier this year to look into strategic possibilities for its Internet service provider subsidiary

Freeserve

, before announcing -- to no one's surprise -- that it will go public this month. The similarities between QXL and Freeserve don't end there: Both are expected to have astronomic valuations despite an as-yet-unproven business model and not much in the way of revenue.

Going...

Should QXL ultimately plump for a listing on the

London Stock Exchange

and/or the

Nasdaq

, it would likely become the U.K.'s second-largest Internet company, following Freeserve. Analysts are predicting the ISP will be valued at around 2 billion pounds ($3.12 billion) and QXL at 500 million pounds ($780 million).

In addition to underscoring Britain's growing fascination with the Internet, a listing would represent a startling transformation for a company that was started in 1997 by Tim Jackson, a former columnist for the

Financial Times

, with 500,000 pounds. In February,

Apax Partners

, an international investment group, announced a $12 million investment in QXL.

Perhaps the biggest sign yet of QXL's intent to go public was Tuesday's announcement that

Group Arnault

, the private holding company of French businessman Bernard Arnault, would invest more than 18.5 million pounds in return for an equity stake in the company.

What QXL and industry sources close to the company like to stress is the strong management team that QXL now has in place. Founder Jackson has stepped aside and Jim Rose, a former head of the U.K. newspaper group

United News Media's

marketing subsidiary, has taken over as CEO. The CFO is Robert Dighero, who previously worked as the CFO at

America Online's

(AOL)

AOL U.K.

As well as a strong management, no doubt tempted by the probability of juicy option packages, QXL has expanded aggressively into continental Europe. The company's U.K. service offers person-to-person and business-to-consumer auctions in 14 other European countries, and QXL now has local language and currency subsidiaries in France, Germany and Italy. These moves abroad prompted QXL to change its name from the less mellifluous

Quixel

.

Ultimately, according to one industry source close to the company who wished to remain anonymous, QXL "does not want merely to be a pan-European auction site but a pan-European e-commerce site offering fixed prices for goods as well as auctions."

OK, but 500 million pounds?

Going...

A press release from QXL says, "The company now has annual sales running at over 12 million pounds."

Even the industry source admitted this was perhaps a bit of a stretch. "Well, it's conceivable that in June the company has sales of 1 million pounds, so I guess on an annualized basis it would come out at 12 million pounds." Nevertheless, the company is growing its customer base at 20% per month and these is no sign of this slowing, he added.

The regulatory framework in the

European Union

may also have some nasty surprises in store. There is talk that the EU will force online auctioneers to take responsibility for goods sold by third parties, which would impose extra costs on QXL. Currently, QXL offers a 14-day money-back guarantee regardless of who is at fault, but more onerous regulations than those in the U.S. will put strains on QXL's bottom line.

Finally, there is the little problem of

eBay

(EBAY) - Get Report

, which last month made its first move into European market by buying the Berlin-based online auctioneer

alando.de

. This acquisition followed moves earlier this year into the U.K., Canada and Australia.

There is no doubt that eBay with its deeper pockets and experience in business over the Internet presents a formidable challenge to QXL. Its purchase of alando.de also appears to put the kibosh on speculation eBay might be interested in buying QXL, thereby removing the investor's Holy Grail of a takeover by the U.S. Internet company.

Yet the industry source said QXL has no intention of building up its business just to sell to the highest bidder. As for technology, eBay's recent outage demonstrates no system is perfect, and eBay's list of acquisitions shows that it has concentrated so far on the English-speaking parts of the world, while QXL's platform is the most advanced in terms of offering multilingual and multicurrency services.

Gone?

So this brings us back to whether QXL will in fact go public. When asked about the chances of a flotation, the industry source said he was not a betting man but would put money on the market seeing "a few more Freeserves" before year's end. Here's hoping that Freeserve's IPO is a success.